Spire Healthcare Ltd v Royal & Sun Alliance Insurance Plc
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 10 December 2020 |
| Neutral Citation | [2020] EWHC 3299 (Comm) |
| Docket Number | Case No: CL-2016-000099 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 December 2020 |
[2020] EWHC 3299 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2016-000099
Mr Daniel Shapiro QC and Mr David Myhill (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Claimant
Mr Graham Eklund QC and Mr Nicholas Broomfield (instructed by DWF Law LLP) for the Defendant
Hearing dates: 3–5 November 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Pelling QC SITTING AS A JUDGE OF THE HIGH COURT
HH Judge Pelling QC:
Introduction
This is the trial of a claim by the Claimant (“Spire”) against the Defendant (“RSA”) under a policy of insurance underwritten by RSA by which RSA insured Spire in respect of its predecessor's liabilities for the acts and omissions of those employed or providing medical or surgical services at hospitals operated by Spire (“Policy”).
This claim is essentially an aggregation dispute in which Spire maintains that the claims in respect of which it is entitled to cover under the Policy were consequent on or attributable to two separate original causes and RSA maintains that they are all attributable to a single source or cause. If Spire is correct it is entitled to recover up to £20 million whereas if RSA is correct then it is only liable to pay Spire £10 million. There are other issues that arise or arose at the start of the trial though they were later conceded. By the time closing submissions were delivered, only Issues 1,2,3 and 9 as set out in the Agreed List of Issues remained to be decided. I refer to those issues in detail below, having set out the relevant background so as to make them intelligible.
Background
The claims, the subject of this dispute, arise from surgery carried out on private patients at two hospitals operated by Spire — known respectively as “Little Aston” and “Parkway” — by Mr Ian Paterson, who at the time was a Consultant Breast Surgeon employed by the Heart of England NHS Foundation Trust (“HEFT”). Mr Paterson was suspended from practice in 2011 by the General Medical Council (“GMC”) over concerns about the manner in which he had performed mastectomy procedures on patients suffering from breast cancer.
It is not necessary in this judgment to explore the technical issues relating to mastectomy procedures in any detail. It is sufficient to note that it was universally accepted by all professionals in the relevant field at the relevant time that if a mastectomy was clinically indicated (because a diagnosis of breast cancer had been made) all breast tissue should be removed in order to eliminate or reduce the risk of a recurrence of breast cancer and the consequent risk that it would metastasise through the blood or lymphatic system to form tumours in other parts of the body.
Notwithstanding the universal practice being as I have described, Mr Paterson developed the practice of performing sub-total mastectomies (“STM”) (which he described as “ cleavage sparing” mastectomies), which involved leaving some breast tissue behind. It is common ground that to perform such procedures was negligent. In most if not all cases where Mr Paterson performed this procedure he failed to obtain informed consent from the patient either by not explaining what he planned to do or failing to explain the risks associated with what he planned to do. Why he developed this practice has never been adequately explained. The two possibilities identified in the evidence were either that which he identified (an improved cosmetic appearance) or because the procedures were rushed and the presence of unremoved tissue went unnoticed. Mr Paterson adopted this practice both in his NHS and private practices.
This method of proceeding had first been detected in 2007 by NHS officials at HEFT. Those NHS officials sought and received from Mr Paterson an assurance that he would stop performing STMs but by 2011 it had become apparent that he had continued to perform such procedures. The GMC placed restrictions on Mr Paterson's practice in consequence and, in August 2011, Spire suspended all Mr Paterson's practising privileges at its hospitals. The GMC thereafter suspended Mr Paterson from practice.
Following his suspension, in October 2011, it was discovered that Mr Paterson had also engaged in what Spire characterises (correctly) as “… a quite different, and utterly abhorrent strand of conduct, carrying out unnecessary surgical procedures – typically wide local excisions (“WLEs”) – where there was no clinical indication for the surgical procedure undertaken.” Mr Paterson's methodology was to falsely report pathology test results as indicating the presence or a risk of the presence of cancer, obtain consent for treatment on the basis of this falsely reported pathology and then perform unnecessary surgery and follow up treatment for which necessarily no informed consent had been obtained. This course of misconduct occurred almost exclusively in relation to private patients, for which Mr Paterson claimed fees either from the patients themselves or their insurers.
This led to Mr Paterson being charged with offences under sections 18 and 20 of the Offences against the Person Act 1861 and tried in the Crown Court at Nottingham before Jeremy Baker J and a jury, where he was convicted of 17 counts under s.18 and 3 counts under s.20. He was sentenced to 15 years imprisonment, later increased on appeal by the Attorney General to the Criminal Division of the Court of Appeal (“CACD”) to 20 years. In his sentencing remarks, Jeremy Baker J said:
“57. Inevitably, the effect of carrying out the unnecessary procedures upon these individuals, has varied from one to another. However, it is clear both from listening to their accounts during the trial, and subsequently having considered their victim impact statements, that the physical, and particularly psychological effect upon each of them, has been profound.
58. All of them have suffered the pain and discomfort associated with surgery, whilst some have suffered the debilitating longer-term effects of complications arising from the unnecessary procedures; especially those who have undergone mastectomies with immediate subcutaneous reconstruction.
59. All of them have been left feeling violated and vulnerable, whilst some have suffered prolonged psychological conditions, including post-traumatic stress disorder, anxiety and depression, which has required professional intervention and treatment.
60. All of them have been left with physical scarring to their bodies, and those who underwent mastectomies have had their breast tissues removed. The one man who was affected by this type of procedure has spoken eloquently of the effect that this procedure has had upon him, and it is probably difficult to overstate its psychological effect upon the women to whom it took place, which is best encapsulated by one of the victims, who puts it in these terms,
“Now and probably for the rest of my life, when I look in the mirror I see a victim of Paterson, who took away part of being a woman.”
61. In addition to economic losses caused to some of these individuals, either from the cost of the operations themselves, or the psychological impact on their employability, the other effect which is common to all these individuals has been their loss of trust in others, including the medical profession, and the reputational harm of your conduct may well extend beyond those immediately affected.”
As Hallett LJ observed in the course of delivering the judgment of the CACD:
“The jury's verdicts mean that they were satisfied that over a period of 14 years, in respect of ten patients (nine women and one man) the offender deliberately misrepresented the contents of pathology, exaggerated the risk of cancer and advised and carried out unnecessary surgery including mastectomies.”
About 750 former patients of Mr Paterson commenced proceedings, with the Lead Action being case number HQ15 P 02152 between LG and 6 others v (1) Mr Paterson, (2) Spire and (3) HEFT (“Paterson Litigation”). The claims against Spire were by claimant patients who had either suffered negligently performed STMs or who had been the victims of unnecessary surgery as described by Jeremy Baker J and Hallett LJ or who have been the victim of both negligently performed STMs and unnecessary surgery. RSA accepts that Spire is entitled to an indemnity under Section 4 of the Policy in respect of its legal liabilities to the patient claimants and its defence costs. In total, Spire contends that its outlay on damages, costs and its own defence costs amount to £37,239,007.81. It maintains that it has incurred a combined outlay in excess of £10m in respect of each of the groups of cases which it maintains are to be aggregated. RSA does not accept that this is so and puts Spire to proof on that issue.
The Issues to be Determined
The Aggregation Issue
The Aggregation issue is the principal issue to be determined at this trial. It is the subject of issues 1–3 in the Agreed List of Issues. In summary, by clause 5(a) of the Policy, it was agreed between the parties that:
“The total amount payable by the Company in respect of all damages costs and expenses arising out of all claims during any Period of Insurance consequent on or attributable to one source or original cause irrespective of the number of Persons Entitled to Indemnity having a claim under this Policy consequent on or attributable to that one source or original cause shall not exceed the Limit...
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Spire Healthcare Ltd v Royal & Sun Alliance Insurance Ltd
...COURT OF JUSTICE BUSINESS AND PROPERTY COURTS COMMERCIAL COURT His Honour Judge Pelling QC (sitting as a Judge of the High Court) [2020] EWHC 3299 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL Lord Justice Underhill Vice-President of the Court of Appeal (Civil Division) Lord Justi......